Whitbread share price: Numis upbeat on group after Costa Coffee deal

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Sep 11, 2018
Updated: Mar 11, 2020

Numis argues that Whitbread’s (LON:WTB) sale of its Costa Coffee business to Coca-Cola for £3.9 billion has crystallised value as well as removed its greatest source of earnings uncertainty, Citywire reports. The Premier Inn owner unveiled the deal last month, having previously announced plans to demerge the unit.

Whitbread’s share price has been subdued in London in today’s session, having given up 0.54 percent to 4,639.00p as of 10:17 BST, largely in line with losses in the benchmark FTSE 100 index which is currently 0.62 percent worse off at 7,234.30 points. The group’s shares have added just under 23 percent to their value over the past year, as compared with about a 2.4-percet fall in the Footsie.

Numis sees Whitbread as ‘add’

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Numis resumed coverage of Whitbread with an ‘add’ recommendation yesterday, with a price target of 5,400p on the shares, following the group’s deal to sell its Costa Coffee business. Citywire quoted the broker’s analyst Tim Barrett as commenting that the Costa Coffee ‘windfall’ reduced the downgrade risk and “crystallises value, but also simplifies Whitbread’s investment case and removes the greatest source of earnings uncertainty”.

“With the distractions of Costa soon to be gone and Premier Inn offering an asset-backed, defensive growth business, we resume coverage with an ‘add’ recommendation,” the analyst concluded.

Other analysts on FTSE 100 group

The 18 analysts offering 12-month price targets for Whitbread for the Financial Times have a median target of 4,760.00p on the shares, with a high estimate of 5,600.00p and a low estimate of 2,000.00p. As of September 7, the consensus forecast amongst 22 polled investment analysts covering the FTSE 100 group advises investors to hold their position in the company. 

As of 10:34 BST, Tuesday, 11 September, Whitbread plc share price is 4,629.00p.

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